Consumers Warned of Pawnbrokers and High Interest Loans

The Consumer Action Law Centre (CALC) in Victoria has recently assisted a Melbourne woman who had a history of entering into high-interest, pawn-broking contracts with Cash Converters.

CALC argued that Cash Converters engaged in unconscionable conduct as they entered into the loans knowing that the woman, known only as Kristen, would not be able to make full repayments.

Kristen believes that she lost approximately $30,000 in the form of fees, interest and items over the last eight years. She paid 420% interest per annum on monthly loan repayments while Cash Converters held valuable items she used to secure the loan.

Kristen chose to accept a $4000 settlement from Cash Converters to discontinue the claim.

CALC was of the opinion that a serious legal challenge could have been mounted against the pawnbroking business model as it may be unconscionable conduct for pawn loans to be continually extended which results in long-term high-cost debt.

Affected consumers in Western Australia may contact Consumer Credit Legal Service (WA) on 9221 7066 for advice on this issue.